New Economics Papers
on Public Finance
Issue of 2006‒03‒05
three papers chosen by

  1. Optimal Income Taxation and Public Good Provision in a Two-Class Economy By Felix Bierbrauer
  2. The State Fiscal Costs of a First-Time Farmer Tax Exemption By Swenson, David A.
  3. China?s Fiscal System: A Work in Progress By Christine C.P. Wong; Richard M. Bird

  1. By: Felix Bierbrauer (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: This paper combines the problem of optimal income taxation with the free-rider problem in public good provision. There are two groups of individuals with private information on their earning ability and their valuation of a public good. Adjustments of the transfer system are needed to discourage the more productive from exaggerating the desirability of public good provision. Similarly, the less productive need to be prevented from understating their valuation. Relative to an optimal income tax, which focuses solely on earning ability, income transfers are increased whenever a public good is installed and are decreased otherwise.
    Keywords: Income Taxation, Public Good Provision, Revelation of Preferences, Two-dimensional Heterogeneity
    JEL: D71 D82 H21 H41
    Date: 2006–01
  2. By: Swenson, David A.
    Abstract: This is a study of the potential tax costs and participant benefits of an income tax credit to landowners that rent their land to beginning farmers. This study also contains highly detailed modeled information about the overall state income tax incidence borne by farmers ages 50 or more in Iowa.
    JEL: H2
    Date: 2006–02–22
  3. By: Christine C.P. Wong; Richard M. Bird (Rotman School of Management, University of Toronto)
    Abstract: We argue in this paper that unless China begins to tackle more systematically the serious problems that have emerged in the finances of its various levels of sub-national government the problems to which the present unsatisfactory system give rise will over time increasingly distort resource allocation, increase distributional tensions, and slow down the impressive recent growth of the Chinese economy. Despite the lack of solid and reliable information on the size and nature of China?s real fiscal system, we show that the evidence available is generally consistent with this pessimistic reading. China?s fiscal and ? in time ? economic future thus rests to some extent on reforms to key aspects of its fiscal system, especially its intergovernmental finances. Moreover, a more consistent and purposive framework to this complex of problems seems needed. Given the scale and scope of China?s underlying public finance problems, the ?reactive gradualism? evidenced in recent ad hoc reforms to this or that piece of the fiscal system has, we suggest, run its course.
    Keywords: China;intergovernmental finance;taxation;budget
    JEL: H11 H70 O53 P21
    Date: 2005–10

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